The Investor Mentality

The Philippines, lately, has become one of the prime locations for foreign direct investments (FDI), since there is a tremendous potential for profit to be made in developing countries or emerging markets. This is a significant factor that currently boosts the local economy, especially the local stock market. The inflow and outflow of foreign money is highly evident in the Philippine economy these days due to the mining sector since Philippines has one of the world’s best reserves in gold and other precious minerals. This is the cycle that Filipino investors take advantage of in their aim to benefit from a healthy stock market.

The dramatic increase in inflow of foreign money means confidence in the stability and profitability of the country and its government (thanks to the resolve of the present administration in fighting corruption in the government). It is a clear sign of progress that the Philippines is long overdue. There would be more jobs to go around and higher valuation of local stocks. The negative effect; however in the long run, would be a possible over dependence on this type of surplus. This becomes a problem if and when foreign investors suddenly pull out their money leaving the locals to deal with the effects of the aftermath.

Nevertheless, Filipinos can be proactive and not reactive in facing whatever challenges there are down the road. As they always say, every cloud has a silver lining; even when it seems like the situation is bleak, one would always see a light at the end of the tunnel. There is always a valuable learning in every experience, and this learning would strengthen our fortitude in facing future economic challenges. By the time we face similar challenge, we will be armed with a plan and a solution.

The best way to deal with this situation is to educate Filipinos in financial literacy. Filipinos who are abroad and who are more financially literate than the regular Juan on the street should help groups who advocate this movement. One such advocate is Southville International School and Colleges (www.southville.edu.ph). It is one of a handful of schools in the Philippines to infuse courses in personal finance and investment, which includes stock market education, in all its college programs. So, whether you are taking up a non-business-related program like Nursing or Education or Psychology, you will acquire the knowledge in investment and finance. Southville believes that the only way for the country to level up in the global economy is when its people shift from the “consumer mentality” to “investor mentality”.

That is why Southville put up an in-campus stock trading facility so that all students can have access to stock market training and trading services of the Philippine Stock Exchange (www.pse.com.ph). Believing that learning about finance and investment should start at a young age, Southville embedded business subjects including stock market education in high school.

Since research shows that less than 3% of Filipinos invest their money in the local stock market, which is a far cry from our Asian neighbours, educating the younger generation on investment would increase the critical mass. If more Filipinos invest in the local stock market, our economy will not be affected if foreign money is pulled out. We could see that countries who rate high on financial literacy are countries that are highly developed. It is not wrong to copy what is right. Therefore we should adapt the same practice and look forward to a better Philippines in the not so distant future.